All those naively hoping that Saudi Arabia has suddenly developed some altruistic bent and will act against its own interest by increasing excess production (which according to Jim Rogers it simply does not have), to keep oil prices lower, are advised to reevaluate. According to CBS, citing "the conclusion of an internal report prepared by a major investment firm based on information from its extensive and knowledgeable contacts within OPEC" Saudi Arabia won’t take "significant steps to bring down the price of crude oil until Brent, the grade traded most on the open market, reaches $120 a barrel, about 8 percent above current levels." More from CBS: "In the report, which was made available to MoneyWatch on the condition that the firm not be named because briefings with its contacts are off the record, the OPEC sources reiterate their earlier analysis of the oil market, which has proven to be on the nose. They contend that the delicate political situation across the Middle East and North Africa - including the fragile state of affairs within Saudi borders - is preventing the kingdom from doing the sensible economic thing and increasing production to keep prices under control." Which simply means that Rogers and all those doubting the veracity of Saudi's motives, not to mention the kingdom's rhetoric that it has boosted output to over 9 million bbls/day, have been correct, and the supply/demand dynamics of the stock market have been largely unchanged since Libya took over 1.6 million barrels of oil from the market.

Saudi authorities were reported to have raised output late last week to compensate for supply disruptions in Libya, but if the investment firm’s sources are right, as they have been since unrest in the region was in its initial phase, the Saudi move may not be as big or as prolonged as many expect. The firm’s report indicates that Saudi leaders have other concerns that would persuade them to take less robust steps than usual to stabilize oil prices:

“The main threat is . . . Saudi instability when the current king dies. We know he is very ill but obviously there is no indication of how critical that condition is. But it is acknowledged that the next transition will present a much bigger threat to internal stability. . . . Vested interest groups have been waiting for this transition to push their agenda. Saudi experienced considerable regional instability up to 10 years ago but bought it off with higher oil-based spending. Today the problem is as bad, if not worse. There have been only a few of the promised reforms. . . . Resentment towards the wealth gap with the royals is very high. . . . Even if/when the instability in other countries, such as Libya, settles, the Saudi succession threat is now firmly on the table. What happens in Bahrain could be very key. That alone will keep the oil market nervous for this year.”

The investment firm predicts that $120 a barrel will provide greater resistance for buyers to overcome than $100 did. Still, it warns that as the price approaches that level, Saudi Arabia will be inclined to increase production “cautiously rather than aggressively.”

The report does not address the impact of $120 oil on stocks and bonds, but it probably would be harmful to both. And what if oil doesn’t stop at $120? If Saudi Arabia is beset by a succession struggle and/or something similar to what has happened elsewhere in the region and oil prices shoot past that level, the reaction in financial markets is likely to be severe.

As this story spreads, look for Brent to not go much lower from here as total chaos appears to be the underlying geopolitical thesis yet again.

Yep, no shit. I could have told you that a $40,000 car that can only go 400 miles per plug-in/fill up with extra parts to break is not going to work. Remember, they have to please the religious environmentalist crowd. Reality is pointless.

They need protection... What are they going to change to, gold? How long will we be able to buy oil with that? Then what? They'll stay put until they're scared enough to leave... then we'll have to convince a whole new set of people to let us take our liberties with their hind ends.

There's a conpiracy to drive the price of oil much higher. TPTB want to make sure that the jobless hungry mobs can't afford to buy the gas needed to make their molotovcocktail when all hell break loose. A hungry man is an angry man!

Sorry - I was attempting to be sarcastic. This is just another confirmation that the Fed cares little, if at all, about the working people of the US, and indeed the world. If the price of saving his Wall St. masters is $120 oil, or $220 oil for that matter, it's a price worth paying in his eyes.

Well that's just it I can't blame the oil producers for wanting more. The easy oil is getting pumped and I totally understand wanting to get more debased dollars for it. Problem is, like always, the serfs are getting caught in the crossfire. I for one can't wait for the petrodollar to die. Sure oil prices will sky rocket for the US and kick me in the teeth, but at least it will force the sleeping masses to stir in their slumber and ask "WTF just happened?!?!"

At that point, I believe, we will see the perfect opportunity to truthfully explain exactly what did happen. There is no doubt in my mind that the TPTW will have a plethora of 'explanations' to choose from, and will attempt to insert their own narrative in order to make sure we keep on sleeping on. This will be the most dangerous time for them, and as a direct corollary, the most dangerous time for us as well.

The day you go RAMBO on yours. Don't forget you have an advantage over them : you have a maestro playing QE-forever, Benocide, who will not only create mega-inflation but definitely tank USD and economy for nothing...Maestro...is not going to change his tune...by the looks of it.

Forget 120..I'm looking for a new all time high. Ben did not like the last selloff not taking down silver and commodities. 155 oil may be just his ticket to getting a QE3 out the door.
Expect another Selloff below 12,000 to try to supress Silver prices.
$50.00 silver makes for good mainstream headlines and we cannot let the serfs get any bright ideas about preserving their wealth. Remember we are dealing with the greatest price fixing experiment of all time.
Ben needs buyers of treasuries, lower input costs and Silver down. If he must he will take the market down.

Why not take the market down? The Pigmen can get a heads up and go short into the maelstrom. Zimbabwe Ben gets WE3, and the ponzi moves on. While at the same time get to try to scalp the commodity (and PM) longs. With QE3 can ramp the market back up, just need a convenient excuse to force a sell off. With the current geopolitical situation I think that they can just pick one of the weekly crises to trigger the take down. "We don't know what happened! Early investigations point to Waddel and Reed selling some futures..." or "Oops butterfingers! Sold billions not millions, but man B and M are so close..."

Yet they will be spun as bad guys for minding their own TR (being bad humanitarians besides this point). Input costs are increasing WITH the price of oil, but they need higher oil prices to facilitate, um...the world. It is an interesting quandary. How soon before the oiligarchs all fake suicides?

Why? Some of them will probably suffer health problems, like Bernanke having a mysterious heart attack and closed casket funeral. Wonder what he looks like with a hair piece and no beard? But mostly I see them sitting astride their thrones, and why not. The masses still are unaware of what is happening. They are still looking at the political actors and thinking they are the ones in charge. So the oligarchy can rotate a fresh crop of goons to take the heat for them when it gets to hot. It's one hell of a steam valve system. If the USSR had two faction one party system like the US we would still be in the cold war.

The majority of muslims in the region are fed up with the monarchy that is supported be Bernanke's Fed policy because food prices are too high, and the living standards that are below humanly possible. The fight will go on as long as it has to. And by the end, the oilgarchs being pansies, will run away.

Pansies? Well maybe our definitions differ. These guys are stone cold killers. Now maybe they are not out with a lead pipe accosting people, but instead having their goons crack heads. And so long as goons are willing to crack heads they will stick around.

It's not like the House of Saud doesn't have some troops. Nominally allied with the US, so I'm not sure the US can say anything at all about them strafing people if needs be. After all who sold them all the gear? Can the US risk the House of Saud opening up a crypt full of economic/political skeletons? Or moving away from the petrodollar? If the US doesn't at least stay silent on the Saudi affair then I expect massive fireworks.

They are pathological, and once again you give them too much credit. I think they are spoiled pansies who have never had a real opposition. While the world used the dollar bling blind, these fuckers did what they wanted. They were spoiled. They have become complacent. They will run away before they kill their own people. If they start the US will be blamed.

If this happens welcome to a WWIII that has no oil production. The Nazis lost WWII due to a lack of oil production you know. America has no infrastructure in place to support oil production, and if the US teams up with the house of Saud, the US will be seen as bad guys helping tyrants. If they do not, they will not have the oil to facilitate their regime. Lose/lose for the US/HSA.

Of course the US will have massive problems. I have never disputed this. But are you assuming the oligarchy is tied to the hip with the US? This does not seem to be the case to my eyes. They are riding the US, and using it to their own ends. When the US is used up they will discard it like a child would toss aside a broken toy. Kinda like the UK and the British Empire.

Granted a lot of the lower end power brokers will get caught up in the disaster and lose a lot, but I have little reason to think the real power players don't see this coming. After all if we can see it, then don't you think that with all their resources and think tanks the big boys see what is happening? You may call them complacent, but old money is cautious about keeping itself going, and I would be hesitant to sell them short.

Fair enough, but I think that what is happening in the Middle East and North Africa is being under rated by not only the media but by the oilgarchs themselves. I think people have woken up. I think that respective oilgarchical regimes (that means you too, US) are abouts to start falling. I do not think the HSA will be able to justify killing their protesters. Same with the US. If the police state does try and lock us all down from America and across the world, I think simply the revolution will not be televised.

I do not think the HSA will be able to justify killing their protesters. Same with the US.

If the US authorities start shooting protesters, expect that a lot of people will interpret that as a subtle request to turn in some precious metals - namely copper-plated lead, to the government for the good of the country, and to do so ASAP. Most people who interpret it that way will send it in via airmail, cooperative souls that they are.

If it comes down to it - I think it will be 'gloves off' before the US allows the House of Saud to fall, unless they've got a new satrap lined up.

There'll be (another?) false flag here in the West, and we'll be told the protestors in Saudi are aligned with the terrorists who killed our children. Our brainwashed troops will 'restore order' as necessary. If the locals keep resisting, the death squads will be sent out. Eventually, they'll get the message... oil will go to $150 and the Saudi rulers will placate the survivors with more goodies.

I agree with you whole-heartedly, except regarding the price of oil. If things get so bad that we need to put troops into SA, then oil will be $200 in a heartbeat. Then say hello to QE3 and goodbye to talk - even in the laughably pro-Obama media - of any recovery. IOW, say hello to GD2.

That's a laugh! The higher the Brent price, the more money there is in the king's Bank for sale of Saudi crude at existing production levels. What do they mean "won't take advantage of"...? They have it on a plate!

THE POPULAR uprisings across the Middle East are sparking similar unrest in the Kingdom of Saudi Arabia, with youth groups and workers in that country now calling for a “day of rage” demonstration in the capital, Riyadh, on March 11th.

When these kings are faced with losing their thrones they will dump the dollar.

Dollar printing is only exacerbating the problem. The finite (yes finite) resource called oil would/will continue to increase in price regardless of dollar printing. Printing only increases the rise in price. Now Bernank is saying that commodity price increases 'may' lead to some 'modest' inflation. Bwahahhahahaha. Folks, as Chris Martenson has stated.....we have a predicament....NOT a problem. There is a difference.

Funny you should be so particular. My favorite Edgar Allen Poe story has long been 'The Predicament' which, if you don't know, concerns a person who sticks their head out of a clock tower to enjoy the view, only to have the minute hand of the clock descend slowly but inexorably down upon their neck.

...And Pompey, my negro!–sweet Pompey! how shall I ever forget thee?I had taken Pompey's arm. He was three feet in height (I like to be particular)and about seventy, or perhaps eighty, years of age. He had bow-legs and was corpulent...

The Saudis are another prime example of how imbalances will create problems-- same shit different smell there, here, and across the world. All thanks to centrally planned economic bullshit and terrorism by the IMF, WorldBank, central banks (the capo's), and manipulated by the MSM/LSM and dirty politicians willing to sell their souls for a cheap dollar or two.

Whether the Saudis do have the oil or not, I doubt they really are doing their best to bring the prices down; after all it's been 147$ before and all the Arab states went happily on crazy spending binges.

Yeah - It went to $147/bbl and the entire world economy promptly went over the cliff along with demand. The Saudis are not stupid, they want the maximum stable income from their oil resource - that is not found by jacking up the price until you have surpluses that no one can afford. There is a sweet spot in terms of price/bbl and we are far North of it right now.

I think Matt Simmons and Jim Rogers are correct: Saudi Arabia has little, if any, spare production capacity. The Aramco web site has no new oil exploration or development projects in the 5 years since "Sunset In the Desert" was written.